2 nd September 2008 SUBMISSION TO THE NATIONAL COUNCIL OF PROVINCES ON THE CONSUMER PROTECTION BILL BILL 19 of 2008

OVERVIEW Introduction DMA of SA status Intention of the submission: commitment Sections of concerns to the Industry and recommendations Definition of Direct Marketing Section 11 : Right to opt out Section 12 : Time to contact consumers Section 16 : Cooling of period Section 21 :Unsolicited goods or services Section 32 :Direct Marketing at home Section 40 :Unconscionable Conduct Conclusion

DMA of SA STATUS The DMA’s purpose is to encourage and develop the highest standards of direct marketing in South Africa and to promote and take an active role in ensuring compliance with ethical standards of the practice for marketing. Section 21 company registered Broad range of businesses and representation Essential approach of informing, retaining and on going customers relationships The DMA recognises the need for government to legislate to protect consumers

Specific comments on the Bill Thank you to the DTI for the opportunities to participate constructively in the drafting of the sections effecting the direct marketing industry Note: Numerous clauses that specifically affect that direct marketing industry are dependent on the content of the Regulations, which the DMA believes will only be drafted in This obviously creates a difficulty, not only for the DMA, but for business as a whole, to comment on the these sections fully, as, without the Regulations, the impact of the clauses on the direct marketing business and the DMA is not yet know or understood

Direct marketing“ read together with: „Electronic communication“ i.e.Bluetooth,Internet are controlled by the consumers It is therefore unclear how a Direct Marketer can control, and thus be held liable for these specific channels of marketing. Proposal We propose that Bluetooth, internet connection and websites be deleted from this definition. Definition of “Direct Marketing”

Section 11 „The right to opt out“ is fully supported by the DMA The DMA would like to request that in terms of section 11(3),the DMA’s opt- out register be recognized as the authoritative registry in South Africa whereby consumers are able to register their opt-out requirements. It is submitted that there can only be one opt-out register, which is to be operated and made available on a national basis. With regards to section 11(5), allowance should be made for the consumer to pay the nominal cost of making a phone call, sending an SMS or posting a letter.

Section 12 Time for contacting consumers As the DTI is aware, the call centre industry is a thriving industry that creates employment opportunities It is difficult to comment on the extent of this provision as it is dependent on Regulations being drafted which will detail the “prohibited period” Again, the DMA would like to appeal to the DTI to adopt its Code of Conduct, which its members strictly adhere to, which regulate matters such as this.

Proposal: insert new Section 12(2) Proposal It is proposed that an additional clause, numbered 12(2) be added which is to read “A supplier must not send any form of direct marketing by way of electronic communication directed to a consumer at home for any promotional purpose during a prohibited period prescribed in terms of this section, except to the extent that the consumer has expressly or implicitly requested or agreed otherwise. The supplier shall not be held responsible for the delay in transmission of the electronic communication, should such electronic communication be delayed so that it only reaches the consumer at home during a prohibited period.”

Section 16 „Consumer right to cooling off period“ must be read with section 20, the right to return goods is prejudicial to marketers i.e. DVD, software, games Proposal Certain items should be excluded from section 20(b)(ii) in particular, and it is suggested that a list be compiled and published in the Regulations. Concerning items are, inter alia, CD’s, DVD’s, Software, Computer Games, Food stuffs, Beverages, Books, Make-up, Perfume etc.

Section 21 Unsolicited goods and services This section appear prejudicial to the DMA members who have legitimately supplied goods to consumer’s, but it also appears to prejudicial to the actual consumer who has purchased the goods It cannot be the intention of the DTI that the actual lawful owner of the goods (namely, the original consumer) has to go to this extent to reclaim his/her goods

Section 32 Direct marketing to consumers at home Proposal In this regard, the clause seems to be somewhat ambiguous, and the DMA would suggest that the words “to a consumer at his/her place of residence” be inserted after the words “who is direct marketing any goods or services”. The words “at his her place of residence” must be added after the words “and concludes a transaction/agreement with a consumer”.

Section 40 ( new Concept) Unconscionable conduct when used in relation to any conduct means – (a) having a character contemplated in section 40; (b) otherwise unethical or improper to a degree that would shock the conscience of a reasonable person”. However, the DMA is still concerned that, especially in light of 40(1) which reads “a person may not use physical force against an individual (“ consumer?”) coercion, undue influence, pressure or harassment, unfair tactics or any other similar conduct” in connection with, inter alia, marketing of any goods or services.

Section 40 (contd) Subsection 2 states that “it is unconscionable for a supplier to knowingly to take advantage of the fact that a potential consumer was substantially unable to protect the consumer’s own interests because of physical or mental disability, illiteracy, ignorance, inability to understand the language of an agreement of any other similar factor”. Often, without physical interaction with the consumer, a direct marketer may not be able to assess this (although it is submitted that even with physical interaction, this may not be possible).

Section 40 (contd) Unconscionable vs discrimination This section, read together with the provisions of section 8(1) to (3) regarding consumer protection against discrimination, the provisions of section 40 would leave the members of the DMA in a bit of a catch-22 position. In the event that any marketer decides not to enter into a transaction with a consumer because the consumer appears to be “ignorant”, it could we be that such marketer is then regarded as discriminating against the consumer based on the provisions of section 8(1) to (3).

Conclusion The DMA recognises the need for government to protect consumers by way of legislation. However it is imperative that the right balance between consumer protection the national economic imperatives in order to increase sustainable economic growth and create employment

Thank you